Macatawa Bank reports second quarter profit, improved balance sheet

Press file photoMacatawa Bank reported a profit and improved balance sheet as it closed out the second quarter.

HOLLAND – Macatawa Bank continued to improve its balance sheet in the second quarter, capping the first half of the year with another quarterly profit that followed a successful stock offering that raised an additional $20.4 million.

The Holland-based bank today said it earned $2.4 million, or 13 cents per share, during the three months ending June 30. That was up from $1.7 million, or 10 cents per share, in the same period a year ago.

The stock offering completed in June also enabled it to achieve a capital ratio that would put it well into the “well-capitalized” category, pending a final ruling from regulators.

Chairman Richard Postma said the bank is now in compliance with a consent order and looked forward to continuing to work toward the goal of having the regulatory restrictions that came along with the order removed.

“We believe that our improved results reflect the disciplined approach we began to implement in late 2009,” Postma said in a press release. “We will continue to adhere to this approach in the management of the company and focus our efforts on addressing areas needing further improvement, especially the continued reduction of the bank’s level of non-performing assets.

"The company also now has a capital base that will support future organic growth and consideration of future strategic opportunities.”

Net interest income, typically derived from loans, was $11.8 million in the quarter, down about $1 million from a year ago. Net interest margin improved as the company relied less on wholesale funding and more on local deposits to fund lending.

Non-interest income of $3.6 million was down $2.7 million from a year ago, reflecting a gain recognized in the second quarter of 2010 from the sale of an investment portfolio.

The company had a negative $2 million provision for loan losses, as it saw improvements in non-performing loans, and continued shrinkage of the overall loan portfolio.

The bank's ratio of loan loss reserves to non-performing loans was nearly one to one at 92.7 percent – the highest level since June of 2007. Non-performing loans totaled $40.4 million, or 3.7 percent of total loans, the lowest level since the third quarter of 2007.

Before the earnings were issued, Macatawa shares closed at $2.79, down 16 cents, on the Nasdaq market. Its shares have traded between $1.29 and $5.20 over the past 52 weeks.